Tracking companies are part of a huge network of advertisers and websites that use cookies, web bugs, and other tracking technologies to collect personal information as purchasers transact purchases on the Internet. These companies create profiles of consumers that often include the sites visited, searches conducted, articles read, items purchased, and more.
Data miners combine this online data with offline data like salary history, voter files, and marriage licenses. Companies use these profiles for various applications, such as targeting online advertisements, determining credit scores, or determining whether a user is qualified for a job. Tracking companies generally make money by either selling a user's information to other companies or displaying ads to the user. Targeted ads can be ads that are based on a user's preferences and browsing habits. For example, if the user has been researching trips to Germany and has visited several websites about the country, trackers know the user's interest in the topic of Germany, and can show the user Germany-related ads on every site that supports targeted advertising.
One of the most significant impacts of data compilation is data discrimination. As discussed above, trackers and advertisers can build and sell detailed profiles about users by collecting and selling personal information such as articles read, email addresses, favorite websites, social media acquaintances, buying habits, and videos watched. Companies can use these profiles for applications that are relatively innocuous (e.g., targeted advertising), but can also use these profiles for applications that users may find objectionable, such as price discrimination, calculation of higher insurance premiums, reduction of credit, employment screening, and identity theft. While there's some value to individual website analytics, like improving the site and the user experience, most tracking is carried out by unaffiliated third parties that consumers wouldn't expect to be involved, with less well-intentioned or clear purposes. Once a profile is compiled about a particular user, the data can be used to show if the consumer, for example, pays with coupons, returns items on a regular basis, or costs the company an unnecessary amount because of longer than necessary customer service use. While it is unclear, this activity could cause unnecessary price discrimination, poorer customer service encounters, and other coupons or discounts from being offered.
Another issue regarding the construction of these detailed user profiles is that these profiles can sometimes end up in the wrong hands. Even major credit bureaus routinely sell personal records to computer hackers and other unsavory characters for profit, which can put a consumer's social security number and other personally identifiable information at risk. Once the data is gleaned from these records, it can be used for identity theft purposes, and can pose a serious risk to consumers transacting online purchases.